Nonprofits and social services organizations know that planning and passion can make or break a startup. Naturally, many charitable organizations turn to business insurance to ensure they can continue pursuing their vision and helping communities and people in need. However, there are still many misconceptions about business insurance, what it can offer an organization, and the actual amount of financial risk involved in foregoing insurance altogether. Without the facts, you may inadvertently leave your business open to loss in the event of an accident or liability claim. Read on to learn the most common myths about business insurance and the facts you need to know before purchasing a policy.
Nonprofit Business Insurance Myths Revealed
When your nonprofit or social services business needs business insurance, the details matter. Your notions going into your search will determine the types of coverage you look for — or the ones you pointedly pass by. But if your business doesn’t have adequate coverage or the requisite policies for the protection it needs, it only takes one lawsuit to devastate your finances. That’s why it’s imperative to either do your research or work with an insurance expert who knows the nonprofit industry (hint: the Nonprofit Specialist agents at insureon are happy to help!) when shopping for insurance.
To start your business protection plan on the right foot, read on for the most common business insurance myths and take note.
Business Insurance Myth #1: “If I’m sued, I’ll just close my organization.”
Though many people — even those with considerable business savvy — fall prey to this kind of thinking, know that this is the number one business insurance myth. Closing your nonprofit or social services business will not spare you from the financial avalanche of a lawsuit. If someone sues your company and the court finds it guilty of wrongdoing, it doesn’t matter whether your business is still operational or not. You will still be responsible for paying the costly court settlement out of pocket if you don’t have the appropriate business insurance policy to back you up.
Along the same lines, some nonprofits believe that the fact that they have such limited funds will shield them in the event of a lawsuit. However, this is an equally misguided notion. The absence of great wealth or valuable assets doesn’t mean you aren’t collectible. In truth, if your business can’t cover the cost of settlement or judgments, your personal finances can be collected. Your board members’ personal assets can be collected, too, which is why many nonprofits opt to carry Directors & Officers Insurance. This policy ensures that if someone alleges the company misused funds or mistreated employees, the talent on your board won’t pay out of pocket for court expenses and settlements.
Business Insurance Myth #2: “My nonprofit / social services business is too small to need an insurance policy.”
No matter the size of your operation, your nonprofit will always benefit from risk management and protection planning. And because funds are usually tight in charitable businesses, chances are your company could not comfortably weather a financial crisis and still have the means to continue your mission. Business insurance offers your organization a safety net by transferring the financial obligation of a costly claim on to your insurance provider. So if someone sues your business or you lose your business equipment in a devastating fire, your insurance company offers the compensation you need to pay court costs or buy new gear.
Business Insurance Myth #3: “My Errors & Omissions Insurance policy should cover me from the major risks my nonprofit encounters.”
Errors & Omissions (E & O), a valuable tool when it comes to professional liability claims, is just part of the larger business protection puzzle. It’s true that E & O claims tend to be among the most costly, but there are other liability concerns, too. For example, if a third party is injured at your office or building, you’ll need a General Liability policy to cover their medical expenses or to pay for court fees if they sue. If someone at an event becomes intoxicated and causes a car accident, you could be named in a liquor liability lawsuit.
As mentioned earlier, you’ll also want to carry Directors & Officers Insurance to protect your nonprofits board members from the executive decisions they make on behalf of your company. And don’t forget that if disasters occur — such as a fire, tornado, or theft — and your business property is destroyed, you’ll want to have a Property Insurance policy in force so you have the funds to replace your items and repair your office space. When you work with the insurance experts at insureon, we can help you determine the coverages that meet your business needs and help you find competitive quotes, too.
Business Insurance Myth #4: “My nonprofit is most volunteer-based. I probably don’t need Workers’ Compensation coverage.”
Even if your nonprofit is entirely run by volunteer work, your business could still be held financially responsible for injuries your team sustains while performing their duties. Plus, your state may mandate that you carry Workers’ Compensation Insurance regardless of the status of your workers. This coverage ensures your business has the funds to cover their medical needs if an accident occurs. It also compensates your nonprofit for court costs, settlement expenses, and attorney’s fees if an injured worker sues your company for negligence or failure to provide a safe work environment. To learn more about Workers’ Comp and your state laws governing the coverage, contact an insureon agent today. We can help you determine the policy that adheres to your state’s regulations.
Coverage for Your Nonprofit Organization or Social Services Business
When you’re ready to find a reliable business protection plan, simply complete our all-online application. Because we appreciate that no two businesses are alike, we can even create a custom policy based on the unique risks and concerns for your nonprofit or social services organization.